Choosing the Right IRA
Through a selection of IRAs, SEPs and SIMPLE Plans, you can choose a plan that can help meet your retirement needs while investing in stocks, bonds, mutual funds, money markets or government securities.
Your Financial Advisor can help you choose from these accounts and gain the control you’ll need to adjust your investment selections according to changing economic and market conditions or changes in your personal situation.
The Workers, Retirees and Employers Recovery Act of 2008 (WRERA 2008) was signed by the President on December 22, 2008. WRERA 2008 is significant for as it suspends required minimum distributions (RMD's) in 2009. The need to take 2009 required minimum distributions (RMD’s) from IRA accounts for clients age 70½ and older, as well as RMD’s for heirs with Inherited/Beneficiary IRAs is waived in the New Year — 2009.
Be aware that if your turned 70½ in 2008 and are waiting to take your first RMD until your required beginning date (RBD) of April 1, 2009 you will still need take that distribution. You will not be required, however, to take a second RMD for 2009.
If you choose to take RMD’s from your IRA accounts in 2009, you may do so and will have such distributions reported and taxed as usual.
Traditional IRAs
Introduced in 1974, the Traditional IRA has been a popular vehicle for tax-deferred retirement savings. The benefits of the Traditional IRA include:
- Working individuals and their spouses under age 70½ can each contribute to a Traditional IRA.
- Individual contributions are $5,000 in 2008 and 2009.
- Catch-up contributions are $1000 if you are age 50 or older in 2008 and 2009.
- Regardless of your ability to deduct your contributions, any earnings will grow tax-deferred.
- Distributions from an IRA are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59 ½.
Roth IRA
The Roth became available in 1998 and has gained popularity because of its potential for tax-free distributions of contributions and earnings. Provisions of the Roth IRA include:
- Contributions are always non-deductible.
- Tax-free distributions of contributions and earnings may be taken after five years and age 59½ (certain exceptions may apply).
- Distributions from Roth IRAs are not mandatory during the holders lifetime.
- If your income is not more than $100,000 (married filing jointly or single), you may be eligible to convert part or all of your Traditional IRA to a Roth IRA.
- Qualified Roth IRA distributions are not subject to state and local taxation in most states.
Rollover IRA
For those individuals who are changing jobs, being severed from employment, or retiring, IRA Rollovers can be ideal. Benefits include:
- Transfer a lump sum directly from your plan to your IRA and maintain the tax-deferred status of your retirement assets.
- Continue deferral of taxes on money accumulated in your former employer's 401(k), 457, 403(b) or other retirement plan.
- Rollover contributions are not subject to the $5,000 annual limit on contributions to IRAs.
- Distributions from an IRA are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59 ½.
SEP & SIMPLE Plans
Since the introduction of SEP & SIMPLE plans, small and new business owners have many options to help employees save for retirement. Benefits include:
- All company contributions are immediately 100% vested and available to the participants.
- Part-time employees may not be excluded.
- Company contributions are tax-deductible for the employer and neither contributions nor earnings are taxed to participants until distributed.
- Distributions from SEP and SIMPLE IRAs are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59½.
- For SIMPLE IRAs, the Federal penalty increases to 25% if distributions are taken during the first two years of plan membership.
Our Advisors Help You Decide
We understand the importance of your retirement planning decisions. Maximizing the value of your savings can help make your dreams for retirement a reality. We offer a wide selection of retirement-planning services and can assist you in examining your personal situation to help you choose a Retirement Account that is appropriate for you.
